Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation Number: 1051435141928

Date of advice: 2 October 2018

Ruling

Subject: Income tax – deductible gift recipient – in Australia requirement

Question 1

Does the charitable institution satisfy, and will it continue to satisfy, the “in Australia” requirement in column 4 of item 1 of the table in section 30-15 of the Income Tax Assessment Act 1997 (ITAA 1997), notwithstanding the establishment of the Overseas Operations?

Answer

Yes

Question 2

On the basis that charitable institution will continue to satisfy the “in Australia” requirement, will it continue to be entitled to its Current Endorsements?

Answer

Yes

This ruling applies for the following periods:

Year ended 30 June 20xx

Year ending 30 June 20xx

Year ending 30 June 20xx

The scheme commences on:

1 July 20xx

Relevant facts and circumstances

The charitable institution is registered with the Australian Charities and Non-for-profits Commission (ACNC) with the subtype Public Benevolent Institution (PBI) and advancing social or public welfare.

The charitable institution currently holds the following endorsements:

The charitable institution’s primary objects are set out in its Constitution, and include the following:

The charitable institution is governed by a board of directors, including a Chief Executive Officer (CEO), who reports to the board.

The charitable institution currently employs a number of people and has a network of volunteers in Australia.

The charitable institution intends to expand its activities to some overseas jurisdictions (Overseas Operations).

In summary, the Overseas Operations will be structured as follows:

Relevant legislative provisions

Column 4 of item 1 of the table in section 30-15 of the Income Tax Assessment Act 1997 (ITAA 1997)

Section 50-105 of the ITAA 1997

Section 123C of the Fringe Benefits Tax Assessment Act 1986 (FBTAA1986)

Section 176 of A New Tax System (Goods and Services Tax) Act 1999

Reasons for decision

Question 1

Summary

The charitable institution is established and legally recognised in Australia. The day-to-day management of its operations is in Australia. Therefore, the charitable institution satisfies condition (a) in item 1 of the table in section 30-15 of ITAA 1997 for the entity to be “in Australia”

Detailed reasoning

Special condition (a) in item 1 of the table in section 30-15 of ITAA 1997 requires a DGR to “be in Australia”.

TR2018/D1 Income tax: the 'in Australia' requirement for certain deductible gift recipients and income tax exempt entities (TR2018/D1) applies the ordinary meaning of the phrase “be in Australia”:

Being either established or legally recognised is sufficient. Legal recognition means being given status by the Australian legal system. It could include, for example, registration under the Australian Charities and Not-for-Profits Commission Act 2012 (ACNC Act), Corporations Act 2001, A New Tax System (Australian Business Number) Act 1999 (ABN Act) or as an incorporated association under an Act of Parliament of a State or Territory.

The charitable institution was established in Australia. It is an Australian Public Company, and it is registered as a charity with ACNC. Therefore, the charitable institution is established and legally recognised in Australia.

The constitution of the charitable institution limits it to conducting its activities in Australia. However, after the proposed amendment, the “in Australia” condition will be removed from the constitution in order for the charitable institution to be able to pursue its purposes overseas.

The charitable institution has an office in Australia. Its board meets in Australia and carries out the day-to day management while in Australia. All of its directors reside and work in Australia.

While some directors will spend time overseas, they frequently return to Australia, and work on the charitable institution’s affairs while they are in Australia.

Therefore, the day-to-day operational and managerial decisions are made in Australia. The proposed secondments and visits to the Overseas Operations, should not change this position, as the directors and employees visiting the Overseas Operations will be conducting the day-to-day management of those entities. These individuals stationed outside of Australia will not displace the (board’s) conduct of the day-to-day management of the entity’s operations from within Australia.

The charitable institution satisfies the DGR “in Australia” requirement as it is established and legally recognised in Australia, and its day-to-day management is in Australia. It is not a requirement for DGR endorsement of the charitable institution that it has its purposes and beneficiaries in Australia.

Question 2

Following from the answer to Question 1, the charitable institution satisfies the “in Australia” condition and may retain its registration as a charity with a PBI subtype with the ACNC. Therefore, the charitable institution should continue to be entitled to its current endorsements as defined in the Relevant Facts and Circumstances.

We recommend that entities regularly review their DGR to ensure that they continue to operate for the purposes for which they were granted status as a DGR. More detailed guidance may be found at our website ato.gov.au, by searching the quick code QC 46218


Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).